Stephen Harper has all but exhausted his policy agenda and his government is adrift. Last week, the Conservative caucus landed on Prince Edward Island for a strategy meeting. The Prime Minister should have used these discussions to muster a new agenda before Parliament returns in the fall. Without one, the opposition parties will continue to advance their agendas in spite of the 2006 election results.

PM Stephen Harper at this past weekend's Tory caucus meetings

When Prime Minister Harper seizes the policy initiative, he governs well. Indeed, credit should be given to the Conservative government for implementing most of its five election promises. Those priorities are enacting the Federal Accountability Act, reducing the GST from 7% to 6% and signalling another point chop by 2011; replacing a planned daycare scheme with a universal child care allowance; developing medical wait-times guarantees with the provinces; and advancing legislation to get tough on criminals (the Senate is obstructing passage of the crime bills).

The federal government has also prepared the legislative ground work to make the Senate democratic and promote accountability on native reserves. Conservative bills will limit Senate terms to eight years and authorize voters to elect their Senate representatives. To improve the plight of natives, another bill will expand Canada's human rights laws to native Canadians. (Aboriginal reserve governments are currently exempt from the Canadian Human Rights Act.)

Although the opposition is blocking these sensible reforms, the government should not yield -- it is one thing to tie a bill up in Parliament and an altogether different ball game to explain in an election why senators ought to remain appointed or that aboriginals are not entitled to the same legal protections other Canadians take for granted. The Conservatives are well positioned here, but it will be a protracted campaign.

Mr. Harper's immediate challenge is to identify taxpayer-friendly goals that resonate with voters. Initiatives like a national securities regulator might improve market efficiency but will not win many votes. The same is true of selling excess government buildings.

While Canada's second minority Parliament has been productive, it has not generated the results many taxpayers had hoped for. What is most alarming is the unrelenting rise in spending. The Conservative's two budgets boosted spending by $24.4-billion over two-years. As a result the size of the federal government has grown by 14%.

Evidence of bureaucratic feather-nesting came in July with a government study examining civil servants' pay. It reported Canada's bureaucracy is bloated and the mid-1990s budget cutbacks to the civil service have been undone. Public servants are paid an average salary higher than their private sector counterparts and receive rich benefit packages. Since 1999 the cost of the bureaucracy has increased by an astounding 50 per cent.

Agenda item one for the Conservatives should be to cut spending. Item two should be to dedicate savings to debt reduction. Canada's debt currently stands at $472-billion. Since 1961, debt interest and service charges have cost taxpayers almost $1-trillion. Canadians would welcome a plan to pay off the debt. It can be achieved if Parliament passes a debt repayment law with annual payments of 5 per cent of total revenues. Each year, Ottawa squanders $34-billion paying interest. As the debt is reduced, significant savings will be realized through lower interest payments.

The third policy item is to cut income taxes, since Finance Minister Jim Flaherty is not taxing to collect money to fund programs, but rather finding ways to spend money government collects. Two years ago the federal surplus totaled $13.2-billion. Last year it was $9.2-billion. The spending of surplus dollars is responsible for Ottawa's 14% expansion.

To moderate demands for tax relief, the finance minister has again underestimated this year's surplus figure. In July, the department of finance reported a budgetary surplus of $3.5-billion for the first two months of the fiscal year. Mr. Flaherty's March budget pegs it at $3.3-billion for the entire year. Mr. Flaherty's surplus denials, "tax fairness" rhetoric, and nominal tax relief proposals have become tedious. Canadians pay too much tax and all deserve relief.

That makes three new proposals for Prime Minister Harper's team to consider. Taxpayers are unlikely to be motivated for a political party that they see as being little different than the alternative. The Liberals are seriously considering some sort of tax relief policy, perhaps even income splitting. As such, the Conservative government is in danger of being outflanked where they should not.